Louis Vuitton Market and Firm Research Paper This section includes information on how the firm makes money, who are the firm’s buyers and suppliers, and wh

Louis Vuitton Market and Firm Research Paper This section includes information on how the firm makes money, who are the firm’s buyers and suppliers, and what are one or two major industry changes that have affected (or in your estimation will affect) the Company, its buyers, or its suppliers in recent years (or the near future).This section should also include an in-depth analysis of market(s) impacted by the selected challenge. It includes a SWOT analysis, details of your Company’s current market share and its marketing strategy consisting of market segmentation, target market customer profiles, positioning of the product(s), and marketing mix, as captured by the 4Ps.References:Cite all the sources used in your report in the references section and use APA citation style format throughout the report. Example of APA citation style format: http://www.apastyle.org/index.aspx Appendices: Tables, Graphs, Graphics and other Supplemental Materials.5 pages and my analysis is attached. I. Market and Firm Analysis
A.
Brief history of the Company
At the age of 16, Louis Vuitton (founder) made the life-changing decision to move to
Paris. Upon his arrival, he began to apprentice for Monsieur Maréchal. Under Marechal,
Vuitton learned to create durable containers to pack and protect items during
transportation (what we would now call luggage). Vuitton became incredibly skilled and
well-respected during his 17 years under Maréchal. He then decided to open his own
trunk shop. Vuitton introduced a waterproof trunk and later expanded upon his design
with the world’s first unpickable lock. Due to such high demand, Vuitton found
immediate success and was forced into a larger workspace. Around this time was when
he introduced the signature damier canvas design and monogrammed logo. Clearly, the
company continued successfully as it was passed down to family members and
nonrelatives. Louis Vuitton has positioned itself as one of the most notable brands in
luxury fashion and the company continues to thrive to this day expanding beyond
luggage and handbags to pieces like menswear, womenswear, and so much more.
B. Company mission statement.
Louis Vuitton mission statement is to:
“Embody unique savoir-faire, a carefully preserved heritage and dynamic engagement
with modernity and to represent the most refined qualities of Western “Art de Vivre”
(The Art of Living) around the world; to be synonymous with both elegance and
creativity; to blend tradition and innovation, and kindle dream and fantasy,to be creative
and aim for excellence.”
C. Major competitors, including their strengths (at least 3) and weaknesses (at least 3).
Louis Vuitton has six immense competitors. These competitors are Hermes, Gucci,
Prada, Chanel, Burberry and Versace. Hermes is known for its strong brand and global
image. They are well known for their portfolio, which produces about 14 products. These
products are ties, scarves, leather goods, apparel for men and women, jewelry, perfume,
gloves, watches, footwear, tableware and decorative items. Hermes has over 12,0000 well
trained employees. Hermes allows online shopping, making it easy for shoppers to
purchase items whenever they want. Some weaknesses the company holds is items being
replicated and sold at a very cheap price. Also posing a threat to the company, Louis
Vuitton owns nearly 22.3% of the company. Hermes is also economically unstable, they
could face payment risk across the globe.
Gucci, the second competitor, is considered the highest selling Italian fashion
brand. They hold business operations in about 600 stores, while maintaining an online
store, which lead to a 115% growth increase in revenue. Gucci products are sold at
wholesale through various franchisees and department stores. Some weaknesses the
company faces are instability in management and financial base. Gucci has a debt that
has increased from 17 million to 1.3 billion. They lack marketing their products; a
majority of their products do not sell well. The profitability ratio and net contribution
percent of Gucci are below the industry average.
Prada is well known for their products being widely available to both men and
women, with a wide range of products. Prada has a strong cash flow, which produces
resources in the hand of the company to expand into new projects. This is why they are
able to hold a wide range of products for both genders. Prada is also accessible online,
and is known for a high level of customer satisfaction. They are dedicated to customer
relationship management. Some weaknesses the company faces is, it’s day to day
inventory is high priced compared to its competitors. They face high losses of employees.
One big problem Prada faces is that they are environmentally unfriendly.
Chanel is a well known company because of its high level of customer
satisfaction and the constant development of new products. The brand value is $7.2
billion, with sales that reach $5.2 billion. Chanel has highly skilled employees due to the
fact the company puts a lot of money towards training and learning programs. Some
weaknesses the company faces is the need to invest more money in new technologies,
which enhances global expansion. Another problem is the high prices, which limit
potential customers. Chanel is not easily accessible online, it’s only able to purchase
cosmetics and fragrances.
Burberry is known for its easily spotted checkered pattern design. The company is
focused on creating a strong brand retention. The company is globally accessible, with
500 stores in 50 countries. Burberry has a strong social media marketing strategy. They
engaged with the community and constantly updated their pages. They are on Facebook,
Twitter and Youtube. Some weaknesses the company faces are limited products, prices
too high, so they target a small group of individuals, and face highly replicas.
Versace is known for exactly targeting the right market for their products being
created. Their target market is all ages, both men and women. Versace engages with
customers, they are very logal. They have multiple channels: stores, boutiques, and
online. Some weaknesses the company faces is that prices are too high, and there are
many individuals who love their products but cannot afford them. There are high amounts
of replicas being created and high competition (brand switching).
D.
Other environmental factors that are relevant to your firm.
– Political and legal factors
Some political factors about Louis Vuitton are that their headquarters are in Paris, France, yet
their products are made in France, Italy, Spain, and the United States so they operate on an
international level.
A recent controversy led to some calling for a boycott of Louis Vuttion, because LVMH’s CEO
Bernard Arnault opened a Louis Vuitton Factory in Texas, and invited President Donald Trump
to attend the ribbon cutting ceremony. Furthermore, people didn’t like that Louis Vuitton
associated fashion with politics in any way shape or form.
– Economic factors
It is no secret that designer goods tend to cost more than regular goods. Given that, the
consumer then has every right to expect higher quality. However Louis Vuitton has (over the
years) gained a reputation for producing their goods cheaply and lacking the same quality
and craftsmanship of other high end brands such as Hermes, Chanel, or Prada. Furthermore
Louis Vuitton does this so they can make a much bigger profit than their competitors.
– Social and demographic factors
Louis Vuitton makes high end leather goods, ready to wear, couture, and accessories all of which
retail for very high prices. For example the classic monogram canvas speedy bag (which is
considered to be an “entry level” purse) retails for $1,060 in the United States. Therefore their
goal is to appeal to a wealthy demographic and socioeconomic class.
– Technological and environmental factors
According to their parent company, LVMH, “LVMH Maisons depend directly on preserving
and respecting the natural resources they use to make their products.” and according to their
2018 Environmental Report they “strive for environmental excellence.”. While this may be
somewhat true, the same Environmental Report shows that they make no effort to minimize
textile waste or reduce use of potent chemicals. Furthermore, they use animal skin, fur, angora,
and hair. Louis Vuttion does have technological advances including a state of the art website, a
mobile app, and the Louis Vuitton Foundation Museum in Paris is one of the most
technologically advanced museums in the world.
E. Analysis of firm’s overall strengths, weaknesses, opportunities, and threats (full
S.W.O.T. analysis).
Strength
1. Brand recognition: the monogram pattern is highly
recognizable, and some customers regards the logo and
pattern as a symbol of social status
2. Consistency of quality and fashion: With the release of
new products each season, Louis Vuitton keeps its standard
of quality and innovation all the time
3. Strong brand portfolio: Louis Vuitton has a broad
portfolio includes leather goods, apparel for women and
men, fragrances, shoes, jewelry, watches, and tech
accessories
4. Exclusive customized merchandise: provide
personalization service: engrave the initials on bags and
fragrance, and color selection of watches, which attract
customers to design their own pieces and separate them from
the crowd
5. Top celebrity advertising and marketing strategies: always
choose the biggest name to endorse the brand and do
advertising, celebrities like Scarlett Johansson, Angelina
Jolie, Madonna, Rihanna
6. Top designers: the design team is composed
by/collaborates with the top designers around the world,
such as Virgil Abloh, Stephen Sprouse, Manolo Blahnik
Weakness
1. Limited selling channel: merchandise
only sold through its own stores, so
people cannot buy in some department
stores
2. High price & limited customer base:
its high level of pricing limits the
buying power from the masses and the
brand is targeting the top market
3. Reliance on Economy: sales rely on
the economic situation. Once there is an
economic crisis or recession, it would
lead to a decline of sales
7. Network: the total number of employees is over 156,000
worldwide in more than 65 countries, and has a total of 4915
stores
8. High customer loyalty
Opportunities
Threats
1. Online channel: has opened its online purchase platform
and thus can engage customers to buy anytime instead of
physical stores
1. Increase of counterfeit products:
affect the global business and erode the
brand image
2. Collaboration with designers, artists, events and brands:
Hiroshi Fujiwara, Jeff Koons, Chapman brothers, League of
Legends, FIFA World Cup, Supreme, Off-White, which is
an stimulus to attract potential customers and increase sales
2. Increasing pay level: result in
pressure on profitability
3. Tariffs: part of Louis Vuitton in China increased its sales
since the government slashed import tariffs on clothing
products from 16% to 7%. By decreasing the import tariffs,
sales can be increased
4. Growing market potential: the global market for luxury
goods has a 4% growth rate, which would be an opportunity
for luxury companies
5. Rise in income: many countries have an increase in the
income so people have more demands to these non-essential
goods and buy luxuries
II. The Challenge
CHALLENGE #1: Sustainability
1A – The Challenge:
3. Competition: increasing competitions
from other luxury brands lead to the
decline of sales
4. Substitute fashion products: imitation
by other brands can dilute the market
share
Louis Vuitton is facing problems with sustainability, since they are not following being
environmentally friendly, have poor labour treatment, and animal welfare.
1B – Viability: If the company continues to not push towards being sustainable, it could potentially
lose customers in the long run. Many individuals are taking this shift to being more sustainable and
animal welfare is one key aspect individuals look at.
1C – The Response: In order to become more conscious of sustainability as a whole company
LVMH should implement using more sustainable materials to make their goods. Using materials
such as recycled cotton and vegan leather would help lower their carbon footprint, water usage, and
cruelty against animals.
THE SOLUTION: The overall solution that we are proposing is a Sustainability Capsule
Collection. The goal of this collection is for Louis Vuitton to produce a collection of clothing
made of 100% recycled materials that would still remain true to their classic chic style. They
would use materials such as recycled cotton with limited dyes and use of machines. So in a
sense they would be creating sustainable couture. Furthermore, Louis Vuitton’s bags and
accessories have to be made with leather to remain true to their brand. Given that this line
would focus mainly on clothes with one special edition sustainable handbag made out of
canvas that consists of recycled cotton this bag would be viewed as a special collectors item,
and not step down from the traditional leather Louis Vuitton bag.
The reason why we are proposing it to be a “Capsule Collection” is because Louis Vuitton is
already one of the most famous and identifiable fashion houses on the global market, and to
change their entire collection to sustainable would be too much of a shake up to the brand.
Furthermore “Capsule Collection” sounds unique and exciting. Additionally we are
proposing (as an incentive to the consumer) a special rewards points system exclusively to the
sustainable line where every $1,000 spent equates to 10% off your next purchase in the
sustainability collection. Overall we believe this would be an exciting collection that would get
the fashion world excited, and perhaps pave the way for more high end fashion houses to do
sustainable lines.
CHALLENGE #2:
2A – The Challenge: Lack of Product Diversity
Diversity is an essential component of the fashion industry. If the brand wants a customer more
purchases, the collection has to be different the next time the customer looks at their website or
comes into a store. However, when we think about Louis Vuitton, we all picture the same thing: a
handbag with the brown print on all over it. There is no point for a customer to buy more than one
bag with the same print on it. Therefore, the challenge for Louis Vuitton is to be more diverse and
to change their collections more often. Luxury brands such as Chanel, Dior, Balenciaga, or Gucci
have been able to diversify their style which helped them break into a younger market.
2B – Viability:
If the company wants their customers to return to the store and buy more than once, they have to
have more to offer. Offering more diversity would allow Louis Vuitton to create a more loyal
customer base.
3B – The Response:
In order for Louis Vuitton to keep their clients and make more than one sale per customer, they
should implement more collections and more diversity in their products. By changing the color, the
print, the shape of the bag, customers will have an opportunity and more interest in returning to the
store to buy another item.
III. Bibliographic Sources
Bhasin, Hitesh. “Top 10 Louis Vuitton Competitors – Louis Vuitton Competitor Analysis.”
Marketing91, 14 July 2018, www.marketing91.com/top-louis-vuitton-competitors/.
https://uk.louisvuitton.com/eng-gb/recommendations/where-are-louis-vuitton-productsmanufactured
https://www.glamour.com/story/everything-you-need-to-know-about-louis-vuitton-texas-factorycontroversy-boycott
https://www.lvmh.com/group/lvmh-commitments/social-environmental-responsibility/
https://r.lvmh-static.com/uploads/2019/09/lvmh__ra_environnement_2018_gb-1.pdf

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